United States v. Two Hundred Seventy-Two Thousand Dollars and No Cents $272

United States District Court, E.D. New York

February 16, 2018

UNITED STATES OF AMERICA, Plaintiff,v.TWO HUNDRED SEVENTY-TWO THOUSAND DOLLARS AND NO CENTS $272, 000, MORE OR LESS, IN UNITED STATES CURRENCY SEIZED FROM RESIDENCE OF YUAHUA ZHU AT 14 WIMBLEDON COURT, JERICHO, NEW YORK, ON OR ABOUT JUNE 6, 2016, AND ALL PROCEEDS TRACEABLE THERETO, Defendants in rem.

MEMORANDUM DECISION AND ORDER

ANN M.
DONNELLY, United States District Judge

INTRODUCTION

On
November 23, 2017, the United States government filed a
verified complaint for civil forfeiture in rem
against $272, 000 in funds. On June 6, 2016, the government
seized the funds from claimant Yuhua Zhu's residence
pursuant to a warrant issued by this Court. Zhu contests the
forfeiture, and now moves to dismiss the complaint under Rule
12(b)(6) of the Federal Rules of Civil Procedure and Rules
G(5)(b) and G(8)(b)(i) of the Supplemental Rules for Certain
Admiralty and Maritime Claims (the "Supplemental
Rules"). For the reasons that follow, the motion is
denied.

BACKGROUND

1.
Factual Background

On
September 26, 2014, the claimant, Yuhua Zhu, was convicted in
New York State Supreme Court, Nassau County, of Attempted
Reckless Endangerment in the First Degree, Assault in the
Third Degree, and Driving While Intoxicated. (Compl., ECF No.
1, ¶¶ 6-7.) She was sentenced to six months in
jail, followed by five years' probation. (Id.)
Conditions of her probation included that she abstain from
alcohol, install a breathalyzer on any car she used, and
submit to warrantless searches by probation officers of her
person, property, residence, or any vehicle under her
control. (Id. ¶¶ 8, 10.)

On June
3, 2016, Nassau County probation officers received a signal
from the breathalyzer in the claimant's car, which
indicated that she attempted to start the car while under the
influence of alcohol. (Id. ¶ 12.) The officers
went to the claimant's residence at 14 Wimbledon Court in
Jericho, New York. (Id. ¶ 13.) During the
search that followed, the officers found approximately $300,
000 in U.S. currency in the claimant's bedroom; the
cash-in denominations of $50 and $100 bills-was bundled
together in plastic bags, which were on top of the
nightstand, as well as in the drawers. (Id. ¶
14.) The officers also found check books and bank records
showing wire transfers of substantial amounts of money from
banks in the United States to financial institutions in
China, federal tax returns indicating a reported loss of $8,
219 in 2014 and $5, 322 in income in 2015, and a closing
statement for the claimant's house at 14 Wimbledon Court
that showed the house was purchased from a third party for
$650, 000. (Id. ¶¶ 14-18.)

The
claimant told the officers that the cash belonged to her
friend, Wayne Zhou. ((Id. ¶ 19.) According to
the claimant, Zhou told her to travel to Flushing, New York,
to meet a man whom she had never met and whose name she did
not know. (Id.) The man gave her the money, and the
claimant took it back to her house. (Id. ¶
22.)[1]

The
probation officers reported their findings to the United
States Drug Enforcement Administration and the Nassau County
Asset Forfeiture Unit. (Id. ¶ 23.) Three days
later, on June 6, 2016, a team of probation officers, Nassau
County Asset Forfeiture Unit officers, and DEA agents
searched the claimant's house. (Id. ¶¶
24, 32.) During the search, the officers found the bundles of
cash; some of the bundles were in the claimant's
nightstand, and the others were concealed in a light fixture
in the bathroom ceiling. (Id. ¶¶ 26-28.)
The DEA's drug-sniffing dog reacted to the cash and the
nightstand where the money was stored, indicating the
presence of narcotics. (Id. ¶ 33.) The claimant
told the officers that she was holding the money for her
friend, Wayne Zhou, who she believed was in China.
(Id. ¶¶ 29, 31.) She did not know
Zhou's address, telephone number, or any other
identifying information about him. (Id. ¶ 29.)
The DEA agents seized the money but did not arrest the
claimant. (Id. ¶ 34.)

2.
Procedural History

On
November 23, 2016, the United States government filed a
verified complaint in rem, alleging that the
cash-the Defendant Funds-was subject to forfeiture pursuant
to 18 U.S.C. § 981(a)(1)(A), as property involved in a
transaction or attempted transaction in violation of 18
U.S.C. § 1956(a)(1), and 21 U.S.C. § 881(a)(6), as
money furnished or intended to be furnished in exchange for a
controlled substance, proceeds traceable to such an exchange,
and/or monies used or intended to be used to facilitate a
violation of the Controlled Substances Act. (Id.
¶¶ 38, 43.) The claimant filed a Statement of Claim
to the Defendant Funds on January 25, 2017, alleging that she
"possessed $250, 000 of the Defendant Property as a
bailee to Wayne Zhou, whom [she] understands] earned these
monies legitimately and entrusted them to [her] to help him
purchase local real estate." (ECF No. 10, ¶¶
1, 4.) She also alleged, for the first time, that she
"owned the remaining $22, 000, which [she] kept in cash
without any intent to break any laws of the United States
whatsoever." (Id.) The claimant contends that
she and Zhou are "innocent owners" of the Defendant
Funds pursuant to 18 U.S.C § 983(d). (Id.
¶ 5.)[2]

On
December 21, 2017, pursuant to Rule G(6) of the Supplemental
Rules, the government served the claimant with Special
Interrogatories. (ECF No. 16-1.) The claimant served her
responses to the Special Interrogatories on or about February
15, 2017. (ECF No. 16-2.)

On
March 14, 2017, the claimant filed this Rule 12(b)(6) motion
to dismiss. (ECF Nos. 15, 15-1.) While this motion was
pending, the government moved to compel further responses to
its Special Interrogatories, and for permission to hold the
claimant's motion to dismiss in abeyance until after the
motion to compel was decided. (ECF No. 16.) On October 26,
2017, 1 granted the government's motion to compel in part
and denied it in part, and granted the government's
request to stay its response to the claimant's motion
until after she responded to the Special Interrogatories.
(ECF No. 20.) The claimant served the government with
supplemental responses on November 30, 2017. (ECF No. 23-4.)
The government filed its opposition to the motion to dismiss
on January 9, 2018, and the claimant filed her reply on
January 23, 2018. (ECF Nos. 23, 24.)

STANDARD
OF REVIEW

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Forfeiture
actions are subject to a slightly different pleading standard
than typical lawsuits. Motions to dismiss in such actions are
governed by the Supplemental Rules and also by the Federal
Rules of Civil Procedure to the extent they do not conflict
with the Supplemental Rules. See In re 650 Fifth Ave. and
Related Properties,777 F.Supp.2d 529, ...

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